• Choose a category
• All
• Classic-Fiction

university during final exams. The sense of purpose was tangible."

Four weeks after 9/11, Lehman purchased a new 38-story building at 745 Seventh

Avenue, where the company would move as soon as possible. It would also lease space at

399 Park Avenue. This time Joe Gregory would make sure the company was invincible in

the face of terrorism. The new Lehman buildings were the first in New York to have

nuclear fallout sensors and training programs in the event of bioterrorism. If there were a

bioterrorist threat, the buildings would become hermetically sealed at the push of a

button.

Worldwide, all Lehman windows were shatterproof. Gregory even commissioned iris

scanners--before the airports did. Lehman also bought disaster recovery sites in Jersey

City and deeper into New Jersey. And 745 Seventh Avenue had four policemen on duty

and two bomb-sniffing Labradors, each with their own ID tags. Lehman led the first post

-9/11 initial public offering (IPO), for Given Imaging Ltd, and the first multibillion-dollar

debt deal, for General Electric Capital. Its return on equity jumped to 26 percent from 15

percent the prior year.

It also committed $10 million to humanitarian causes related to 9/11.

That year it was the only securities firm not to lay anyone off. In fact, its head count rose

16 percent worldwide--to 11,326 employees by the year's end. It was also voted

investment bank of the year by Thomson Financial. Lehman had not only survived, it

thrived.

The media stopped portraying Lehman as a small bank waiting to be acquired; it now was

clear the firm could carry its own weight. In 2002, BusinessWeek magazine voted it the

23rd best company in the S&P 500.

Several years later, Roy Smith--a professor at New York University's business school,

Stern, and a former Goldman Sachs partner--said this about Lehman and the firm's

response to 9/11: "An awful lot of people are surprised that Lehman is still alive. These

guys are survivors. They have defied the world, spit in its face."

After surviving 9/11, two things consumed Dick Fuld and Lehman: Getting the stock

price to 150 and beating Goldman Sachs.

The Goldman and Lehman battle was not restricted to their respective offices. One

former Goldman executive committee member recalls that if he saw a Lehman employee

at a cocktail party, he'd ignore him. "It was childish," he says, "but it was also war."

(Lehman was just as petulant when it came to mixing social life and the competition.

Elton John sang at a concert hosted by Lehman for the World Economic Forum in 2002

when it was held in New York. Joe Perella, at the time working for Morgan Stanley,

arrived at the venue, the Four Seasons Restaurant, uninvited. Fuld politely escorted him

out.)

Fuld started to shake up his management, adding three members to the executive

committee: Rob Shafir, the head of equities; Bart McDade who headed fixed income; and

David Goldfarb, the CFO. Most significantly, Fuld overcame his paranoia and appointed

Brad Jack and Joe Gregory co-COOs. "Cocoa puff," Gregory liked to joke in the office.

A colleague recalls that Fuld made those appointments because of pressure from the

board to implement a succession plan--but Fuld held off naming a president. He was still

not ready for anyone below him to have that much power.

He felt safe appointing Gregory COO because no one thought he was a future CEO, in

part because he kept saying he was about to retire. Brad Jack, in contrast, was CEO

material. Tall and charismatic, he was similar to Chris Pettit--except that most people did

not think he had Pettit's intellectual breadth. Jack confessed that he found business trips

with Fuld exhausting, whereas Pettit had had the stamina of an infantryman.

In fact, in 1998, Jack, then head of training, had been diagnosed with cancer and had to

take some time off. When he returned, there was a massive scar on his torso, from his

back to his front, as if a shark had bitten him. People would see it when